By TIOL News Service

MUMBAI, SEPT 07, 2016: THE appellant entered into an agreement with Haver Germany for manufacture of certain products in India. For the purpose of transfer of technology and import of goods, they entered into an agreement with Haver Germany . The said agreement involved payment of royalty under certain circumstances.

The matter was picked up by the Special Valuation Branch and the customary proceedings followed.

The Additional Commissioner of Customs rejected the transaction value and held that the appellants are related to Haver Germany under Rule 2(2) of Customs Valuation Rules, 2007. The order directed that, at the time of finalization of provisional assessment, royalty mentioned in the agreement be added to the assessable value under Rule 10 of the Customs Valuation Rules, 2007.

As the Commissioner (Appeals) sided with this decision, the appellant is before the Tribunal.

It is informed that no royalty has been paid during the currency of the said agreement and, therefore, there is no question of adding any amount to the assessable value; that while there was a clause for payment of royalty under certain circumstances in the agreement, such circumstances never arose and hence no royalty whatsoever was paid. It is, therefore, submitted that under such circumstances, the assessment can be finalized without going into the issue of includability or otherwise of the royalty of imports and the lower authorities could verify the facts at the time of finalization of assessment.

The AR mentioned that the facts need to be verified.

The Bench observed -

"4. …We find that the assessable value can be enhanced under Customs Valuation Rules, 2007 only if any amount of royalty has been paid by the appellant to the Haver Germany as a condition of sale of goods imported. If no royalty is paid then the entire exercise of determining the includability or otherwise of the royalty become infructuous. Considering the assertion of the learned Counsel that no royalty whatsoever has been paid, we set aside the impugned order and direct the finalization of asessement after due verification of the facts. If for any reason it is found that any royalty has been paid by the appellant to Haver Germany, the Revenue is free to approach the Tribunal for relief."

The appeal was disposed of.

(See 2016-TIOL-2324-CESTAT-MUM)